posted 1 Apr 1999 in Volume 2 Issue 7
A son of BPR?
Those that use the hype of knowledge management to repackage their public image could force knowledge management towards the same fate as Business Process Re-engineering if companies do have the foresight to see beyond just jargon. In the first of three articles, Professor Amin Rajan examines the real impact of this movement on corporate survival within the market place.
'I don't give a fig for simplicity this side of complexity. But I would give my life for simplicity the other side of complexity' ...said Justice Oliver Wendell Holmes when faced with acute moral dilemmas raised by America's litigious populace.
His sentiments are widely echoed by today's CEOs who deal with the paradoxes of globalisation, give us simple ideas and tell us how to implement them in an environment fraught with ambiguity, uncertainties and constraints.
Unless this plea is heeded, knowledge management will suffer the same fate as other big ideas: go from cliché to jargon, without the intermediate stage of meaning.
Should one worry that interest in the subject has increased markedly on both sides of the Atlantic in this decade, just as the dream of business process re-engineering turned sour? BPR promised far more than it could ever deliver. Will the same fate befall knowledge management?
It will, unless it takes us on the 'other side of complexity'. That, at any rate, is the main thrust of our new report, Good Practices in Knowledge Creation & Exchange.1 The research supporting it involved approaching some 8,000 companies in 14 countries on both sides of the Atlantic. Of these, the experiences of only 140 companies were worth highlighting.
Why? Because amongst the rest, many companies have used the hype of knowledge management to re-package new initiatives in areas as diverse as IT systems, training avenues and staff competencies. In most cases, they amount to respraying an old car: they improve external appearance but do damn all to engine performance.
More fundamentally, these initiatives have quietly ignored the formidable structural and cultural blockers that underpin the age-old dictum: knowledge is power. They are overly top-down. The world view of the individuals in the trenches has hardly figured into the equation. Few have addressed the most frequently asked question at today's workplace: why would anyone want to share their knowledge in a climate of exponential change? After all, in this age of job insecurity, innate knowledge is the best way of building a personal franchise.
On the upside however, there are companies where knowledge sharing is the norm. In our sample, we found 140 who subscribe to the ethos that knowledge is only power if it is shared. That is why we decided to concentrate on them. Accordingly, in this and the next two issues of this journal, we shall focus on three sequential themes that define and operationalise the necessary ethos:
|Tacit knowledge is at the heart of knowledge creation|
|This creation is more about business culture than physical systems|
|The relevant culture is far more than putting old wine in new bottles.|
For the 140 companies covered in our report, knowledge management is not about surfing the fads; it is about preparing businesses for the challenges of the new century. They accept that the next century will be dominated by knowledge, not by nations, as has been the case in this century.
The underlying explanation is simple. Trade liberalisation in Europe and around the world since 1980 has released successive waves of competition; each one more exacting than the previous one. In each wave, companies have been forced to seek fresh differentiation in the market place.
In the Eighties, the emphasis was on achieving higher productivity through lean production methods. Then it shifted to shorter-time-to-market through concurrent engineering. Now, as we approach the new century it has shifted to accelerated innovation through knowledge management.
The new mantra from customers is 'more for less'; they want newer products and services of higher quality and better functionality at competitive prices. Companies can no longer rely on their R&D labs alone to meet these needs. Everyone dealing with customers has become an equally important source of new ideas on improving products, services and processes.
Indeed, it is worth recalling a rather dramatic statistic that was supplied to us by the leader of the knowledge management team at AT&T solutions. According to him, there have been no major genuine product breakthroughs since the Sixties when we reaped the benefit of three path-breaking innovations of the post war period; the microchip, the jet engine and the contraceptive pill. Each of them has revolutionised the way we live and work.
Since then however, an overwhelming majority of innovations have been incremental rather than wholesale. They have built on earlier ideas and designs; rather than marked major departures from the past. Furthermore, this incremental process has been decidedly faster than in the past for one simple reason: people at the coal-face end are playing just as important a role as those wearing white coats.
Indeed, in AT&T itself, many of the best product ideas in the last ten years have emanated from work areas as diverse as production, distribution, logistics and after-sales. This has been happening under the guiding ethos that knowledge is only power when shared and applied.
This echoes the point made by Derek Wanless, Group CEO at NatWest, in the foreword to our report. The underlying logic that he provides is at once indisputable and simple; that although the knowledge component of products, processes and systems has been rising throughout history, it has accelerated in this decade under the weight of global competition. Hence business success for most companies is a matter of leveraging the collective knowledge held inside their individual organisations. It is only in this way that companies can accelerate innovation, reduce costs, improve quality and raise profitability.
Lew Platt of Hewlett Packard is not the only Chairman who feels that his company has yet to maximise this leverage when he said, 'If HP knew what HP knows we would be three times more profitable'. There are countless others on both sides of the Atlantic who feel the same. Many of them are now implementing initiatives that are designed to leverage existing knowledge and create new knowledge in the process. Their immediate aim is to ensure survival by acquiring an edge in the evolving head-to-head competition. Their basic aim however, is to ensure that there is no undue loss of 'corporate memory' in a period of rapid change.
In this context, what is new now is the emphasis on tacit knowledge.
This much becomes clear when we draw a distinction between five categories of knowledge (Figure 1):
Figure 1: Hierarchy of Knowledge
|Data: They are raw numbers or anecdotes which in themselves are not revealing|
|Information: This constitutes the key messages from the data once they are analysed for their meaning|
|Explicit knowledge: This is transmittable in formal, systematic language; it is about making enough sense out of information to be able to propose action|
|Tacit knowledge: This is personal, context specific but hard to formalise and communicate - in oral or written form - because it comprises insights, hunches and intuitions|
|Wisdom: This combines all the categories of knowledge to the extent that its deployment requires mental and emotional intelligence, learning and experiencing, thinking and doing.|
Being highly personalised, tacit knowledge and wisdom reside in the individual because they are accumulated insights and experiences. As such, they are fragmented. They are not easy to integrate into a formal body of knowledge.
Indeed, of all categories of knowledge, wisdom is perhaps the hardest one to define. On a lighter note, probably the only person who has got closest to having a handle on this concept is Baroness Thatcher.
She is alleged to have said once that 'what this world needs are leaders who can combine wisdom with humility because there is so few us left who can do that'.
She then upped the game by saying that 'there isn't a problem in this world that can't be solved if only people followed my instructions explicitly'.
But then she went on to give away the game by saying 'I've got many faults, but being wrong isn't one of them'.
At any rate, given this difficulty in deciding what wisdom actually means, it is clear that knowledge management is about converting tacit knowledge (or wisdom, which is its refined version) into explicit knowledge, so that it can be shared with others. As such, it is about turning individual learning into organisational learning.
In a corporate context, the conversion process has three aims: to avoid reinventing the wheel; to enhance the corporate memory as ideas breed new ideas; and to 'fail forward' by creating a momentum with the learning derived from failures.(Figure 2)
The best examples of 'failing forward' are of course penicillin and Viagra. Alexander Fleming never set out to discover penicillin whilst grumpily sorting through the plates containing special cultures he had been growing. Similarly, scientists at Pfizer only stumbled on Viagra whilst trying to invent a drug for people with a heart condition.
Before moving on, it is worth recording a caveat about reinventing the wheel, though. It is not always a bad thing. It can be argued that the person who invented the first wheel was an idiot; the one who invented the other three was a genius! There is a world of difference between invention and innovation. In today's business climate, it is one thing having good ideas; quite another applying them to produce tangible benefits.
In this context, the term knowledge management is a misnomer. It inadvertently gives the impression that the process is definable, controllable and measurable, like much else that is managed in the workplace. The reality is quite the reverse, as we shall see in subsequent articles.
In creating a competitive advantage, all forms of knowledge management are important, of course. But retaining and enhancing corporate memory first and foremost involves the conversion of tacit knowledge into intuitive and conceptual knowledge, as defined here.
A simple statistic shows why tacit knowledge is so central to knowledge management in today's competitive environment: as humans, what we speak or write is one thousandth of what we know. The rest lies fallow in our brains. In order to bring out that 999th of the thousand, special contexts and situations need to be created.
The question is, how do we create them? This will be the subject of the next article.
CREATE has set up a Good Practices Network. For further details, please contact Kirsty Chapple: details as above.
Professor Amin Rajan is Chief Executive of Create. He can be contacted at:
1. 'Good Practices in Knowledge Creation & Exchange', by Amin Rajan, Elizabeth Lank and Kirsty Chapple, is available from CREATE, 15 Tonbridge Chambers, Pembury Road, Tonbridge, Kent TN9 2HZ Tel: 01732 369191 Fax: 01732 369292 email: firstname.lastname@example.org